- The Washington Times - Sunday, April 23, 2000

Liberals and conservatives agree that welfare reform has led to progress on several important fronts. In particular, many more single mothers are drawing a paycheck rather than a welfare check.

Not all of the news, however, is this positive. The poorest fifth of female-headed families with children had lower average income in 1998 (the last year for which these data are available) than in 1995. Census data also show that while the number of children who are poor has declined, the children who remain poor have, on average, become poorer. The average poor child fell farther below the poverty line in 1998 than at any time since 1979. Among these families, losses in means-tested benefits outstripped earnings gains.

There is general consensus that many poor families have inappropriately lost Medicaid and food stamps when they left the welfare rolls, making some families worse off. A report that Speaker Dennis Hastert of Illinois and several other House Republican leaders issued last year extolling welfare reform identified this as a problem needing to be addressed.

There also is broad agreement that the successful aspects of welfare reform reflect policy changes both in welfare and in other areas, as well as the buoyant economy. Research shows that expansions of the earned-income tax credit under three presidents Ronald Reagan, George Bush and Bill Clinton have played a powerful role in inducing more single mothers to go to work and have contributed strongly to welfare reform's progress. So have expansions in Medicaid and child health insurance programs so that children (and in some cases, their parents) continue to have health insurance when their parent works at a low-wage job.

Despite these advances, welfare reform remains unfinished business. Many of the families that remain on welfare won't find jobs easily. An Urban Institute study found that 44 percent of families remaining on welfare have two or more barriers to employment, including lack of transportation or child care, mental illness, disabilities among either the children or the mother, substance abuse and domestic violence. States must be able to address these barriers if we wish to continue making progress in helping welfare recipients secure and retain jobs.

Some mistakenly claim that generous welfare benefits are the primary impediment to greater success. In a recent Commentary article in The Washington Times, Stephen Moore and Michael New of the Cato Institute contend that states with the most generous benefits have been able to cut welfare caseloads only half as much as states with the lowest benefits. They argue that in many states, remaining on welfare pays substantially more than taking an entry-level job.

But their analysis is badly flawed. In claiming that welfare pays more than low-wage work, they substantially overstate what "welfare" pays and substantially understate the benefits that low-income working families receive. For example, they assume all welfare families receive housing subsidies when fewer than one-fourth actually do. And they assume no working poor families receive housing subsidies when a substantial number do. Similarly, they assume all welfare families receive Medicaid (which they inappropriately count as income), but that no working poor families receive either Medicaid or employer-based health insurance, an assumption sharply at odds with reality. In short, they largely miss one of the more striking policy trends of the last 15 years the major strengthening of supports for working poor families not on welfare. When an analytically sound comparison is done, low-wage work now pays significantly more than welfare in virtually every state.

Nor does the evidence support the claim that the size of a state's welfare benefit plays a big role in determining how well the state has done in moving welfare recipients into work. In accordance with the welfare law, the Department of Health and Human Services recently rewarded the states that have performed best in moving welfare recipients into jobs. Examining the HHS data for the 30 states with the lowest unemployment rates, we find that the 15 states with the highest welfare benefits (as defined by Messrs. Moore and New) had moved 44 percent of their welfare recipients into jobs, while the 15 states with the lowest welfare benefits also had moved 44 percent of their recipients into jobs. Welfare benefit levels don't appear to be an important factor here.

We need to learn from what is working successfully as we plot further progress. Lowering benefits to punish disadvantaged families and children, some of whom remain on public assistance only for relatively brief periods, is not the answer. Instead, we need to understand better who is remaining on the rolls longer and why, and to devise more effective strategies to address their employment barriers and move them into the work force. We also must do a better job of enabling working poor families that leave welfare to get the child care, Medicaid and food-stamp benefits for which they qualify.

In addition, we must be mindful of employment barriers that young fathers of children on welfare often face. In the last seven years, the labor force participation rate of young African-American men has declined despite the large drop in the unemployment rate. Over the same period, the labor force participation of young African-American women (many of them single mothers) has increased sharply. One strategy to help push welfare reform along is to try to increase the employment of these young fathers and ensure that young mothers receive the full child support check due them.

Finally, we need to agree on the meaning of "success." Steep declines in caseloads are not an adequate measure of success. For poor families on welfare, true success means a better job, better pay and a path out of poverty.

Wendell Primus is director of income security at the Center on Budget and Policy Priorities. Jennifer Beeson is a policy analyst at the Center.



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